by
Michael Hudson
I just had a
disastrous and embarrassing interaction with Bloomberg, and feel that
I was ambushed and sandbagged by having my comments taken out of
context in a hit piece Bloomberg’s journalists wrote on Venezuela –
evidently trying to distort my own views in a two-for-one job.
On Monday,
March 27, I received a message from a Bloomberg reporter asking me
about a very nice compliment that the President of Venezuela and
Secretary General of the Non-Aligned Movement, Nicolás Maduro, had
said about me:
I was
reading one of the greatest American economists, Michael Hudson, I
don’t know if you know him, I recommend reading his work. He is an
economic thinker, worked as an economist for a long time on Wall
Street, knows this world very well, and has been insisting on the
need for construction of a real economy. He’s been alerting for a
long time through conferences, writings, books and interviews of the
danger that the world has, because he says in his research that of
every $20, $19 arise from the speculative economy and only $1 arises
from the real economy.
More
than 90% of the country’s economic apparatus is in the hands of
private companies.
The
reporter, Christine Jenkins, asked if I knew President Maduro or
could explain what he found of value in my writing. I said that I
thought he probably was referring to my discussion in Killing the
Host of a September 2014 Harvard Business Review article by William
Lazonick, “Profits without Prosperity,” calculating that for the
decade 2003-2012, the 449 companies publicly listed in the S&P
500 index spent only 9% of their earnings on new capital investment.
They used 54% to buy back their own stock, and 37% to pay dividends.
I told the reporter that I thought the President’s point was that
the financial sector was not financing capital formation and
employment to increase output.
I told her
that I had not followed Venezuela’s economy closely in recent
years. I did say that I had discussed how Argentina and Greece were
subjected to austerity as a result of foreign debt, and my belief
that no sovereign nation should be obliged to impose austerity on its
population to pay foreign bondholders. That has indeed been the
problem confronting Latin America for decades, and is a central theme
of all my books since Super Imperialism in 1972.
And to cap
matters, of course, U.S. foreign policy has mobilized the World Bank
and IMF to back creditor interests, foreign investment and
privatization – while isolating countries from Cuba through
Venezuela (and now Greece) to demonstrate that neoliberal diplomacy
will make such a country a pariah if it makes a serious attempt to
oppose austerity and financialization.
Apart from
that, we had no substantive discussion. The reporter ran down some
recent economic facts about Venezuela’s economic crisis, and I
replied to the effect that it sounded like a real quandary. She said
that the country looked like it was straining to pay its foreign
debts and might soon default. I replied with the same advice that I
had given Greece: If you are inevitably going to default on sovereign
jjunkecondebt, it’s best to stop paying now and keep what foreign
exchange you have, and try to renegotiate the debt to bring it within
the ability to be paid. Otherwise, you will end up suffering the
legal tangle of default, but be stripped of funds needed by the
domestic economy to survive.
I said that
I didn’t have a solution to this problem. I haven’t studied the
legal status of Venezuela’s foreign debt, or what alternatives the
government might have had open to it in the face of strong opposition
from its domestic oligarchy as well as foreign pressure.
The
reporter, Christine Jenkins, said that she would read my books to see
how they might have attracted the attention of President Maduro. On
Wednesday, she got back to me, and said that she was going to write
up an article for Bloomberg.
I asked for
a copy, and she wrote back that “Hi – so we actually aren’t
allowed to send articles before publication!” That’s what raised
a red flag in my head. My impression is that every serious reporter
checks back with his or her source to ascertain that the report is
accurate. This seems to be basic journalistic ethics.
The article
was to appear at 6 AM Thursday morning. She tried to allay my fears
by telling me “a little bit about what it says … we make it very
clear that you don’t consider yourself a Venezuelan expert, like
you said, but that if the government sees that default is inevitable,
that its better to get it over with. We mention your recent book, and
also that Killing the Host is the one that probably got Maduro’s
attention. And we talk about how you’ve gotten an international
following, advising some governments, but the one thing I wanted to
give you a heads up about is that we call you a somewhat obscure
economist – and I hope you agree that’s fair, that you’re
definitely not in the mainstream, not a household name, and like you
talked about your area of coverage not being taught at the typical
universities, etc.”
But by noon
I still had not received a copy. I asked for it, and when I got it,
it was nothing at all like what I had said. It made me appear to be
criticizing Venezuela’s politicians and, by implication, President
Maduro. But at no point had I criticized Venezuela’s attempts at
reform. Rather, I had criticized the problem of neoliberal opposition
to countries trying to uplift their populations along the lines that
Venezuela had done, using debt leverage to force countries to impose
austerity. It looks to me like Venezuela is getting the “Greek
treatment.”
I was
appalled to find the article a hit-piece on Venezuela, and to make me
appear to criticize President Maduro by implying that the country is
not helpable. I never said that I was not “a fan of the socialist
leader.” I applaud his attempts to maneuver as best he can within
the corner into which Venezuela has been painted. I did indeed repeat
the headlines of the day – that the country “has entered a period
of anarchy.” There were riots going on, and a constitutional crisis
led to the Supreme Court suspending its congress. That wasn’t a
criticism, just my “umm-hmm” comment on what the reporter was
telling me about the situation.
Venezuela
has made herculean efforts to pay its bondholders in recent years.
This has been a political decision to avoid the even deeper problems
that default would cause. I’m in no position to second-guess
President Maduro or other Venezuelan policy makers. They’ve
probably steered the best course available to them – bad as all the
choices are.
The article
concluded that I would “be disinclined to add an advisory role to
his busy schedule if asked to.” That’s not my language. I said
that I hadn’t been following the situation and have hardly spent
any time in Latin America. Of course I would help in any way that I
could, if asked.
The real
damage came from the right-wing paper Caracas Chronicles, which did a
guilt-by-association attack piece by Jose Gonzales Vargas, “Hudson
on the Guaire.” Asking rhetorically “Who the hell is he?” the
article identified me with
“anti-establishment
outlets across the political spectrum like CounterPunch —who not
long ago was posting apologetic pieces on chavismo − and Zero
Hedge, which … was called by a former contributor a cheerleader for
“Hezbollah, Tehran, Beijing, and Trump.” Speaking of things that
may be linked to Russia, he has also been on RT a couple of times.”
I have never
written for Zero Hedge, although they sometimes reprint articles that
I publish on Naked Capitalism and CounterPunch. The nasty quip about
being “a cheerleader for “Hezbollah, Tehran, Beijing, and Trump”
was not about me; it was written by a Zero Hedge member who was
criticizing his own publication when he left it.
Neither
publication noted that I’ve written numerous op-eds for the
Financial Times, the New York Times, 3 cover articles for Harpers,
and have been featured on the BBC and on Bloomberg radio.
The kicker
of the article was its last sentence: “Well, at least they’ve
still got Weisbrot and Ciccariello-Mahler and those Podemos guys.
They would never turn against the Bolivarian revolution, right?…
Right?”
The
implication is that I’ve broken ranks and that “the left” is
turning against President Maduro. For my part, I can’t think of a
better advisor than Mark Weisbrot. I have no advice to give Venezuela
in its current economic straits that its leaders have not already
thought of. But of course I would like to help if asked. As I wrote
to the Bloomberg reporter after reading her story: “The problem is
that I AM sympathetic with the AIMS of Chavez etc. The problem is the
hostility all around him that is undercutting the economy. That’s
what makes the problem insolvable.”
None of my
beliefs are what Bloomberg and Caracas Chronicles implied.
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